Stamford-Based Patriot Bank Records Strong Quarterly Earnings

STAMFORD, CT - From Patriot Bank: Patriot National Bancorp, Inc. (“Patriot”) (NASDAQ:PNBK), the parent company of Patriot Bank, N.A. (the “Bank”), today announced quarterly pre-tax earnings of $1.4 million and quarterly net income of $1.1 million, or $0.27 per fully diluted share for the quarter ended March 31, 2018.

Patriot’s quarterly net income of $1.1 million highlights continued earnings growth, particularly as compared with net income of $600 thousand in the prior quarter. The quarter is not comparable to the same quarter last year due to a material credit recovery that was recognized in the first quarter of 2017 and material non-recurring acquisition-related expenses recognized in the current quarter. Pre-tax earnings reported for the first quarter of 2018 and the fourth quarter of 2017 included non-recurring transaction expenses of $523 thousand and $601 thousand, respectively, which are associated with two pending acquisitions that are underway. These non-recurring expenses will cease once the acquisitions are consummated and the acquired companies are fully integrated.

CEO Michael Carrazza commented: “In light of the strategic activities and associated transaction expenses, we’re pleased to announce another quarter of strong earnings performance and continued, measured progress. Building scale and franchise value remains on track, and several key additions to our management team add specialization and depth in preparation for building our national SBA lending platform.”

Richard Muskus, Patriot’s President, added: “We are building from a strong foundation, with key new Patriot banking leaders announced today enhancing our lending and deposit gathering strategies. We are well prepared to see continued loan growth in our existing markets, expand to a national SBA lending platform, and build on our retail banking presence.”

Notable management changes announced today by Patriot include:

• Credit: David W. Christiansen as Patriot Bank’s new EVP & Senior Credit Officer, reporting to President Richard Muskus. Mr. Christiansen joins Patriot from First American International Bank of New York, where he was also Executive Vice President & Chief Credit Officer.
• Mr. Christiansen’s leadership of credit administration, credit risk management, underwriting, closing, loan servicing and portfolio management is a strong match for his new role at Patriot. He previously held senior roles at National Cooperative Bank, Credit Agricole and JPMorgan Chase. Mr. Christiansen will replace Samuel Davis who had announced his intention to resign, after serving as Executive Vice President & Chief Credit Officer for nearly nine years. Mr. Davis was part of the turnaround team and instrumental in the resolution of asset quality issues, when the Bank was acquired in 2010. He is working closely with Mr. Christiansen for a seamless and overlapping transition.

• SBA: Kevin Ferryman as Senior Vice President & Director of SBA Lending. His role will be to build Patriot’s east coast Small Business Administration loan business, organically and through the integration of the pending west coast acquisition of Hana Small Business Lending, Inc.
• Mr. Ferryman was most recently Head of SBA Lending for Citizens Bank, one of the largest SBA Lenders in the U.S. Under his leadership, SBA production increased over 500% in four years. He previously led SBA lending initiatives at Capital One Bank and JPMorgan Chase.

• Deposit Gathering: Patriot is in the final stages of hiring a Chief Marketing Officer and Mobile Banking strategist. This role will have key responsibilities for optimizing Patriot’s overall deposit strategy, executing Patriot’s enhanced online and mobile banking platform and implementing unique deposit solutions to support Patriot’s build-out of a national SBA platform.

In addition, Patriot also announced today the declaration of its fourth consecutive quarterly dividend of $0.01 per fully diluted share. The record date for this quarterly dividend will be May 17, 2018 with a dividend payment date of May 22, 2018.

Financial Results

As of March 31, 2018, total assets increased to $870 million, as compared to $852 million at December 31, 2017 and $775 million at March 31, 2017, for a total asset growth of 12% over a one-year period. Net loans receivable totaled $718 million, up 1% over $713 million at December 31, 2017, and up 15% over $625 million at March 31, 2017. Deposits continued to grow to $655 million at March 31, 2018, as compared to $637 million at December 31, 2017 and $561 million at March 31, 2017. Deposit growth remains a key initiative to keep pace with Patriot’s overall growth prospects.

Net interest income was $7.1 million in the quarter, essentially unchanged from the fourth quarter of 2017 and up 28% over 5.5 million from the corresponding 2017 period. Net interest margin was 3.55% for the first quarter of 2018, as compared to 3.51% for the fourth quarter of 2017 and 3.50% for the first quarter of 2017.

The provision for loan losses in the quarter was $185 thousand, as compared to $87 thousand in the fourth quarter of 2017 and a net credit of $1.7 million in the first quarter of 2017, which reflected the previously noted recovery.

Non-interest income was $322 thousand in the quarter, 25% lower than the prior quarter which included gains on the sale of securities of $84 thousand, and 16% higher than the prior year.

Non-interest expense decreased $451 thousand over the prior quarter, and increased $1.1 million over the first quarter of 2017. The quarter’s expenses were impacted by non-recurring project costs of $523 thousand in the quarter associated with the pending acquisitions for Prime Bank and Hana Small Business Lending, Inc. and an income tax related consulting project. The fourth quarter of 2017 included similar non-recurring project costs of $601 thousand.

The income tax provision in the first quarter of $344 thousand represented an effective tax rate of 24% and reflects the positive impact of the tax rate changes enacted in the fourth quarter of 2017.

As of March 31, 2018 shareholders’ equity was $67.6 million, an increase of $3.2 million from a year ago. The Company’s book value per share increased to $17.32 at March 31, 2018, as compared to $16.55 a year ago.

The Bank’s capital ratios continue to be strong, as the Bank maintained its “well capitalized” regulatory status. As of March 31, 2018, Tier 1 leverage ratio was 9.72%, Tier 1 risk based capital was 10.90% and total risk based capital was 11.76%.

Image via Patriot Bank